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Denmark is the fourth freest nation in the world and the absolute best for personal freedom, according to a new report.

The annual Human Freedom Index (HFI), published by US think tank the Cato Institute, ranked Denmark as the world's fourth best country for human freedom, defined as “the absence of coercive constraint”.

Covering 152 countries and based on data from 2012, the most recent available, the HFI is “the most comprehensive freedom index so far created for a globally meaningful set of countries”, according to Cato.

The index ranks countries on a scale of one to 10 in 76 indicators of personal, civil and economic freedom.

Denmark scored highly in all categories and with a 9.58 score was the top nation in the area of personal freedom, which covered such things as movement (including freedom of foreign and domestic movement), relationships (including same-sex relationships) and religion.

Denmark's score in the the study's second main area, economic freedom, was much lower. In that ranking, which covered such areas as the size of government, the legal enforcement of contracts, and the extent of trade and business regulations, Denmark scored just 7.66 and ranked 19th.

Following Denmark in the HFI's overall rankings were Canada, Australia, Ireland, the UK and Sweden. Germany placed 12th, the US 20th, France 33rd and Spain 37th.

The Cato Institute called the US's position in the ranking “worrisome”.

“The United States can no longer claim to be the leading bastion of liberty in the world,” the report's co-author Ian Vásquez wrote in a statement.

According to the report, countries ranked in the top 25 percent enjoyed a significantly higher per capita income than lower ranked nations.

“The HFI finds a strong correlation between human freedom and democracy,” it added. “Hong Kong is an outlier in this regard.”

Founded in 1977, the Cato Institute describes itself as a public policy research organization dedicated to the principles of individual liberty, limited government, free markets and peace. The group's full report can be read here.